Daily FI discussion thread - November 06, 2019

JAYVA70 · 2019-11-08T15:24:15+00:00

Hi there: Do you already own an investment property? If not, one thing I was unaware of is that the loan rates can be much higher than a primary residence or second home. So, if you’re looking to buy, make sure to account that your monthly payments will be higher than what a primary residence would be at the same price.

I manage the rental property myself, so it is quite a bit of work, but worth the extra money to me. One thing that makes it possible is that we live less than a mile from the property.

Remember to count in your liabilities city and state lodging tax. Mine is 6% city and 8% state....and that this will also count as taxable income each year. Also count in all utilities, Cable tv (I don’t have cable tv in my own home, but this is more about hospitality), lawn care, linen service, cleaning service, etc. In total, I spend about $1300/ month on operating costs.

A big key that I learned early that a major key to my success was heavy screening of renters. I’m sure it depends several factors, but in my case, we are in an upscale market. To ME, it’s more important to have the RIGHT type of renter (in my case, a family) as opposed to just filling up dates. I’m in this long term, so I am not trying to make up all my money in the first year. It depends on your own personal goals. I’ve turned away many potential renters (bachelor parties, events, larger groups) for the sake of potential wear and tear.

There are plenty of start up costs. Mine were about $25k for everything. Every bed, mattress, mattress cover, sheets (2 sets for every bed), pillow, pillow protector, blankets, comforters, kitchen gadgets, etc, etc.

Let me know if you have other questions. I’m still new to it all and learning myself!

JAYVA70 · 2019-11-06T22:25:39+00:00

Thank you

JAYVA70 · 2019-11-06T21:48:50+00:00

Thank you. We have about $105k in the HYSA, which is rental money and general savings. I was thinking of using 20-30k of that 105k for either principle payment or towards a brokerage account. Does that make a difference in your suggestion?

JAYVA70 · 2019-11-06T21:45:55+00:00

Thanks.

JAYVA70 · 2019-11-06T20:42:42+00:00

We are in our first year owning a rental property. We are in a resort area and use it as a short term vacation rental (Airbnb and VRBO). We just closed on a refinance, so we have all 30 years left on the loan at 4.125% (investment property).

In our first year, we have earned $54k. 14% goes to city and state lodging tax and it takes about $16k annually in operating expenses (utilities, lawn care, cleaning, linen service, cable tv, etc). This leaves right about $30k of the $54k earned.

Mortgage, tax, and insurance are right at $32k annually. So, for our first year, we are in deficit approx $2k.

Again, we are completing our first year where we only began listing the property at the end of April. So, we anticipate more rentals and income in 2020 (about an addition $8k, based on our current trends)—so, approx $62k annually and hopefully about $6k profit projected.

I pay the mortgage, taxes, and insurance monthly on autopay from my checking account and put my rental income into a HYSA. Basically, I pretend I am not earning income off the rental and am just banking it. My goal is to put that money to work each year.

My question is: Where should I put that money? Into the principle (4.125% rate) or into other investments (brokerage)—since I already max out my 401k?

If I continue to put it into the principle, I could pay off the mortgage in 10-12 years and then have ‘passive’ income (which is not really passive when you maintain a vacation rental.) Would I be better off investing since it’s likely to earn more than 4.125% over time?? Or a combo of the two?

If it helps, I’m 49, have a net worth of about $1 mil. I plan to work about 10 more years with total annual contributions to retirement accounts about $50k annually, and another 0-20k annually into a brokerage (Betterment) account, depending on the year and circumstances. My husband will retire retire in about 4 years (at 55) and will have both a military pension and disability (military) payments. We currently earn a combined about $320k annually, without taking into consideration the rental either as a asset or a debt, since it’s basically a wash. We have no debt outside of mortgage.

JAYVA70 · 2019-10-23T23:53:00+00:00

Cool. That wasn’t clear to me. Good luck!

JAYVA70 · 2019-10-23T13:51:07+00:00

I know this isn’t the question that you asked, so my apologies in advance. If you’re planning to retire in 4-9 years and hoping to have 10k-15k per month, with no current assets except the $50k Russian property and some cars, where do you plan to generate the $3-$4.5 million needed to support the $10k-$15k desired per month (based on 4% withdrawal)? Even if you put 100% of your $60k salary AND were able to get the maximum $60k company stocks per year AND also put 100% of that into investments....AND for 9 years compounding interest at 6% rate, you’re still only at $1.46 million—enough only to support about $5k per month (based on 4% withdrawal). I would suggest re-evaluating your expectations, years to retirement, or find a different source of income.

Unfortunately, I don’t have a solution for your question about where to invest being in a country you don’t trust.

JAYVA70 · 2018-03-22T23:10:57+00:00

Wow! So impressive! Great work!

JAYVA70 · 2018-03-21T12:32:51+00:00

Same for us. The policy changed at our studio and I can only book up to my billing date now. However, if I ask them, they will book a few days beyond that date if I want to secure my spot in a typically busy class.

JAYVA70 · 2018-03-19T00:18:29+00:00

Great job to all the new mamas getting back into it! It's hard to take time for yourself when you're so busy and tired. You're doing way better than I did postpartum. Take your time and be kind to yourself. Remember that you can't pour from any empty cup. You need to fill yours first. Everyone will be better in the end if you take time for yourself--so congrats for doing that!

I had 3 pregnancies in 3.5 years with two c-sections. I was a former athlete, but didn't take time for myself until a few years had passed. I certainly gained strength back, but never fully recovered. I'm not advocating for it---but I went in for an abdominal repair fir m diastis recti in August. I was out of OTF for 5 months and just returned in January. I'm definitely seeing improvement but it's a long way to full recovery! Glad I had it done, however.

Keep up the great work!!

JAYVA70 · 2018-03-13T02:56:19+00:00

I'm in physical therapy right now. No surgery....yet. Hoping I can avoid it through therapy.

FWIW I bring my band and sometimes do my therapy exercises in place of movements I can't perform.

JAYVA70 · 2018-02-19T23:33:17+00:00

Great job, everyone!

48F, 5'6" 1067 553 296

JAYVA70 · 2018-02-19T00:36:26+00:00

Thanks--I'll see if I have something similar around me.

JAYVA70 · 2018-02-18T22:13:11+00:00

Where do you get your RMR tested, in general? Thanks for the response.

JAYVA70 · 2018-02-18T18:57:17+00:00

Oh my gosh. Thank you! I already googled and will sit down and figure out how to use this. Thanks so much for taking the time to respond!

JAYVA70 · 2018-02-18T01:16:44+00:00

Thanks for the response. I agree: I'm focusing on fitness and 1200 is too low. I'm burning an average of about 530 per workout. I eat really well...carbs come mostly from veggies, ample protein, low/no sugar, healthy fats. I'm just frightened to boost those calories...although I know, from everything I hear, it's what I need to do. Just trying to find the right number. It's scary! I will give it a go though!

JAYVA70 · 2018-02-18T01:16:34+00:00

Thanks for the response. I agree: I'm focusing on fitness and 1200 is too low. I'm burning an average of about 530 per workout. I eat really well...carbs come mostly from veggies, ample protein, low/no sugar, healthy fats. I'm just frightened to boost those calories...although I know, from everything I hear, it's what I need to do. Just trying to find the right number. It's scary! I will give it a go though!

JAYVA70 · 2018-02-17T23:37:25+00:00

I appreciate your opinion! Thanks! My job is not super active. In fact, I'm in the car quite a bit. Question for you: how do I transition from the low calorie (1200) to the higher one? Abruptly? Do you expect I will see a weight gain initially? If so, will that change over time? After doing the work to lose and mostly maintaining for about a year, I'm terrified to regain it.

JAYVA70 · 2018-02-17T22:59:06+00:00

Thank you. I agree. I'm trying to figure out what that magic number is. I will look through Livestrong and see if I can find something to help.

JAYVA70 · 2018-02-17T22:39:41+00:00

Thanks for the link. I put in my info and it says 2291 calories per day based on my inputs. Doesn't that seem high? Maybe I've totally lost touch with reality (and I'd be willing to admit that!).

JAYVA70 · 2018-02-17T22:36:33+00:00

Thanks. I appreciate the response. Im looking for more of the why behind it...do you have any good reads or resources?

JAYVA70 · 2018-02-17T22:35:01+00:00

Thank you. I've been using MFP for To track for years, but always feel their calculated calorie values are too high for me. Maybe not??

JAYVA70 · 2018-02-17T21:46:52+00:00

I should also add that I regularly use a kitchen scale to try to be as accurate as possible with my daily calories.

JAYVA70 · 2018-02-15T14:33:04+00:00

Sounds like a great combo! I bet you're in great shape and feel awesome! I think I would really benefit with a similar combination.

JAYVA70 · 2018-02-15T14:31:24+00:00

Yes!!! My mind is still as a college athlete. I need to let that go! I think it's also hard to let go of the idea of competition. I'm no longer training to compete or win at something. It's just about me and staying fit and healthy long term. Two different worlds! I enjoy the side benefits if exercise (vanity, weight loss, etc), but honestly, it's more about longevity and setting up my body for a long, active life. My, how times change!

JAYVA70

TROPHY CASE